Los Angeles sues US Bancorp, calls bank a slumlord
* LA says bank let hundreds of homes slide into disrepair
* Lawsuit seeks hundreds of millions of dollars
* US Bancorp plans to bring servicers into lawsuit
* Bank say servicers responsible for upkeep
By Jonathan Stempel
July 17 (Reuters) - Los Angeles has sued US Bancorp, accusing a unit of the fifth-largest U.S. commercial bank of becoming one of its biggest slumlords and blighting the city by allowing hundreds of foreclosed homes to fall into disrepair.
Monday's civil lawsuit by the office of Los Angeles City Attorney Carmen Trutanich alleges that US Bank NA has taken title to more than 1,500 foreclosed residential properties in the city in its role as trustee for various mortgage-backed securities trusts.
Los Angeles said that at least since July 2008, US Bank has "disregarded virtually every one of its legal duties and responsibilities as owner, resulting in the creation and maintenance of an alarming number of vacant nuisance properties and substandard occupied housing units."
It said the bank has ignored repeated demands that it comply with the law, causing hundreds of homes to become uninhabitable or "public nuisances," and resulting in illegal evictions of hundreds of tenants from the second most-populous U.S. city.
Los Angeles said it is seeking a civil fine of $2,500 a day for each violation by what it called "one of the largest slumlords in the city." It estimated potential liability in the "hundreds of millions of dollars."
Thomas Joyce, a spokesman for Minneapolis-based US Bancorp, said it is the mortgage servicers, not the trustee, who have the responsibility to maintain foreclosed properties, and that "we intend to bring them into" the lawsuit.
Joyce also said the city only recently agreed to detail which homes needed better upkeep, and that the bank will "stand ready" to address property-specific and general foreclosure concerns as it has done in other cities.
Other large U.S. cities have also sued over mortgage industry practices that they allege contributed to urban blight.
Wells Fargo & Co, the nation's largest mortgage lender, in May settled a lawsuit by Memphis, Tennessee , and on July 12 it settled a similar case involving Baltimore.
The Baltimore accord was reached in connection with the San Francisco-based bank's $175 million settlement with the federal government over allegations it overcharged black and Hispanic borrowers on mortgages, contributing to higher foreclosures.
Wells Fargo was one of five big servicers to join February's $25 billion U.S. settlement over foreclosure abuses.
The National Fair Housing Alliance filed discrimination complaints with the federal government in April against both US Bancorp and Wells Fargo, accusing them of doing a better job maintaining foreclosed homes in white neighborhoods than in minority neighborhoods.
According to the 2010 census, Los Angeles had 1.41 million housing units, of which about 95,000 were vacant. The city's population was about 3.79 million.
Shares of U.S. Bancorp were down 9 cents at $32.69 in morning trading on the New York Stock Exchange.
The case is People v. U.S. Bank NA et al, Superior Court of California, Los Angeles County, No. BC488436.
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